The investors are typically interested in more than making money, but in improving the environment and having a connection with farming, explained the Globe and Mail in a feature article.
So far Area One Farms has raised $450 million and is preparing for its fourth round lining up investors.
It has also lined up 24 farm partners in Ontario, Manitoba, Saskatchewan and Alberta.
Area One Farms is considered an impact investment – one that has, alongside financial targets, environmental and social results measured by the United Nations-supported Principles for Responsible Investment and the Task Force on Climate-related Financial Disclosures.
These are global standards being widely adopted by industrial companies, financial institutions and pension funds, said the Globe and Mail.
For farmers, Area One Fams also has a network of experts and fellow producers to mentor farmers on sustainable agriculture, as well as marketing and other services. Its social impact sees farms staying in the hands of families keen to expand to provide a future for the next generation, but prefer to invest in things other than land.
One woman investor said “on both income and appreciation [the farmers] take more than what they owe because they’re managing it. In our view, they’re not just managing the business and the crops, they’re actually managing the land,”
“So where we have most of our money invested and they have most of their money invested, you want that to go up not just because the market goes up, you want to make it better all the time,” she said.
On environmental improvement, the firm pushes regenerative farming techniques, including no-till approaches to managing soil, which minimize erosion and serve to capture carbon.
A report last year by the Canada West Foundation quoted research from the University of Saskatchewan’s Lana Awada, who found that increases in conservation tillage and no-till seeding have led to a 400-per-cent increase in carbon sequestration since the mid-1990s. As a result, Western Canadian farms capture more CO2 than they emit.
“When we didn’t tie up all our capital in land purchase, we were able to use our capital to expand our herd, which worked very well with” the investor said the farmer with whom she is partnered.
“We had grassland and we could run cows on the grass and have a full operation to work together on it,” he said. “So we stayed together as a family in a family operation.”